"It's going to vary quite a bit," depending on where the transactions were initially priced and how much exposure remains, he said.
"We are expecting further losses on these deals," said Richard Ramsden, an analyst at Goldman Sachs who oversees research on large banks.
banks wrote down $1 billion on leveraged and bridge loans as rising interest rates made it tougher for them to offload high-risk debt onto investors and other lenders. Dealmaking in that market dropped 54% to $716.62 billion in the third quarter from the same period last year, according to Dealogic data. JPMorgan President Daniel Pinto told investors last month that he expected the bank's investment banking fees to fall between 45% and 50% in the third-quarter.įor some investment-banking businesses, weakness was exacerbated by a decline in large private-equity buyouts. Shares of Goldman Sachs and Morgan Stanley, which are not part of the index, are down 21.4% and 19.5% respectively during the same period. The S&P 500 bank index (.SPXBK) is down almost 30% this year. The drop comes as corporations' interest in mergers, acquisitions and initial public offerings dried up.Īnalysts expect Bank of America's third-quarter profit to fall nearly 14%, with robust growth at its consumer division estimated to partially offset the decline in advisory fees. 18, while earnings at rival Morgan Stanley are seen falling 28%. Investment-banking powerhouse Goldman Sachs Group Inc (GS.N) is expected to report a 46% plunge in profit when it reports on Oct.
"The concern is that rates will rise too much and slow the economy or push it into a recession," said Matt O'Connor, an analyst at Deutsche Bank, wrote in a research note.Īnalysts expect profit at JPMorgan to drop 24%, while net income at Citigroup and Wells Fargo is forecast to decline 32% and 17%, respectively, according to Refinitiv I/B/E/S data.
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